India has cancelled its scandal-hit $770 million helicopter deal with AgustaWestland, part of Italian defence group Finmeccanica, a senior defence ministry official told Reuters on Wednesday.
India froze payments for the 12 AW101 helicopters after Finmeccanica's then chief executive was arrested in February for allegedly paying bribes to secure the deal, embarrassing the government before parliamentary elections due by May.
India's Defence Minister A.K. Anthony has said he did not believe AgustaWestland's denial that it paid bribes to swing the deal. AgustaWestland denies any wrongdoing.
Finmeccanica spokesman Roberto Alatri in Italy declined to comment on the scrapping of the deal. India's defence ministry, which is expected to issue a statement on Wednesday, was not immediately available for comment.
Italy's Defence Ministry declined to comment.
United Technologies Corp's Sikorsky Aircraft, EADS' Eurocopter and Lockheed Martin may now be in line to provide helicopters for the country's defence forces.